Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to The New York Times Company Q1 2015 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. I would now like to turn the call over to Ms. Andrea Passalacqua. Please go ahead.
Thank you, and welcome to The New York Times Company's first quarter 2015 earnings conference call. On the call today, we have Mark Thompson, President and Chief Executive Officer; James Follo, Executive Vice President and Chief Financial Officer; and Meredith Kopit Levien, Executive Vice President and Chief Revenue Officer. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call, and our actual results could differ materially. Some of the risks and uncertainties that could impact our business are included in our 2014 10-K. In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com. With that, I will turn the call over to Mark Thompson.
Thanks, Andrea, and good morning, everyone. The start of 2015 saw us continue to make real progress in our digital business, with double-digit year-over-year growth in the first quarter in both digital subscriptions and digital advertising. Print had a more mixed quarter, with the headwinds in advertising we saw in the latter part of 2014 continuing through the quarter. Successful cost management contributed to a 5% increase in the company's adjusted operating profit and adjusted earnings per share of $0.11 compared to $0.07 in the prior year. Let me begin with digital subscriptions. We added 47,000 net digital subscribers in the quarter, more than any quarter in the past two years, which is particularly pleasing given that our pay model has now reached its fourth anniversary. That quarterly increase brings us to a total of 957,000 paid digital subscribers.
The strong digital consumer growth in the quarter was attributable to improved retention, higher traffic to our digital assets, and the seasonality of education subscriptions. The higher traffic is evidence of the effect of the program to develop our audience we began to execute in the second half of 2014. The early results of this program have been very encouraging. U.S. digital traffic, for instance, in the form of unduplicated unique users across all devices, was up 22% year-over-year in the first quarter to an average of 59 million monthly users. We're convinced there is scope to increase our digital audience much further without diluting the exceptional levels of engagement which we attract. The results should help boost both our digital subscription and digital advertising businesses. Let me turn now to digital advertising, where we also saw continued momentum in the quarter with year-over-year growth of just under 11%.
Mobile, Paid Posts, video, and programmatic all contributed to that growth. I also want to add a comment about ad viewability, the industry-wide effort currently underway to ensure that advertisers only pay for impressions that have actually been viewed by users. We support viewability, and in common with other publishers, we're in the process of optimizing our website to meet the new standard. While we'll see some reduction in overall ad impressions as we cycle through the change, viewability plays to The Times' fundamental strength and engagement. Any short-term impact on revenue will depend on how the market responds, and we'll know more about that in a few months' time. In the long run, we expect viewability to help rather than hinder our digital advertising growth story. Now let's consider the print side of our business.
As I said at the start, the print advertising headwinds we saw in the second half of 2014 continued into the quarter. Overall, print was down 11% year-over-year, which when blended with the gains in digital advertising, led to an overall advertising decline of 6%. That 11% number includes steeper falls in advertising for our international newspaper, as well as some foreign currency effects. I should also note that print advertising in last year's first quarter was up 4%, due in part to the one-off boost provided by the Super Bowl in New Jersey, and also by a particularly strong Oscars race. The year-over-year comparisons become less onerous as we go through the year. There was a decline in print circulation revenue of 2.4% in the quarter as reduced volume more than offset the positive effects of our January price rise.
Nonetheless, we're focusing our efforts on print circulation retention and believe there is much to be done to better retain our current subscribers. The strong digital subscription story meant that overall circulation revenue grew in the quarter by just under 1%. Since our last earnings call, we've made two important leadership appointments. Kinsey Wilson has added the role of EVP, Products and Technology, to his current duties heading up digital in our newsroom. Kinsey is now leading the work on the development of our digital portfolio. Indeed, we've already announced that next month we'll be converting NYT Now into a free product. We want to continue to use Now to reach younger audiences and to pioneer new ways of delivering compelling news on smartphone. We'll have more to say on the broader portfolio over the next few months.
Kinsey has already had a massive and entirely positive impact on The Times in his first few months. I'm delighted he's going to have this clear overview of all of our digital operations. Just a couple of weeks ago, I also announced that Meredith Kopit Levien, our EVP of Advertising, will be taking on the expanded role of Chief Revenue Officer, meaning that her responsibilities will now include leading the marketing function as well as advertising. Meredith has had a dramatic impact on advertising, gathering a great team around her, backing innovation, building new products and business lines. I'm convinced she can bring similar flair and focus to the vital work of brand and consumer marketing at the Times. I also believe that our new leadership team will allow us to move further and faster in developing the business.
Let me finish by noting that the journalism of "The New York Times," on which everything else depends, continues to be recognized as among the very best in the world. Last week, the Times won no fewer than three Pulitzers, more than any other news organization. Now, to give you more detail on the financial picture, let me hand over to James Follo.
Thanks, Mark, and good morning, everyone. As Mark highlighted, 2015 got off to a good start as we maintain our progress on both the digital advertising and digital subscription sides of our business. There is, of course, still much to accomplish in 2015, though. In the first quarter, for instance, the momentum across digital could not offset overall print declines, leading to overall revenues ending down. Operating expenses decreased in the first quarter by nearly $16 million overall, driven by print distribution efficiencies. Our focus on reducing costs remains a top priority, but we do not expect future quarters to see the same level of expense declines as we saw in Q1. Nonetheless, cost reduction initiatives we recently implemented across the company should allow us to maintain lower costs in 2015 relative to 2014 levels. Adjusted operating profit rose 5% in the quarter to $59 million.
We report a GAAP operating loss of approximately $11 million, driven by a $40 million pension settlement charge in this year's first quarter, as well as a $5 million multi-employer withdrawal charge, compared with an operating profit of $22 million in the same period of 2014. Circulation revenues increased approximately 1% with our digital subscription revenue stream more than offsetting print declines. We benefited from January's home delivery price increases, although higher revenue from the new rates was outweighed by overall volume declines. In the first quarter, digital-only subscription revenues were approximately $46 million, an increase of 14% from the same quarter in 2014. Advertising maintained its progress on the digital platform in the quarter, finishing up 11% and mitigating the print loss of 11%. Digital advertising continued to see a boost from mobile, Paid Posts, video, and programmatic, but overall advertising revenues still declined about 6% in the quarter.
Advertising revenues continued to exhibit month-to-month volatility. Combined print and digital advertising declined 10% in January, which is when we saw the bulk of the Super Bowl and Oscars related strength in last year's first quarter, 3% and 5% in February and March respectively. Print advertising revenue was down during all three months, while digital was consistently strong. Lastly, on the revenue side, our other revenues grew 6% in the quarter, driven by higher revenues from our conference business as well as from rental income. Expense management efforts remained front and center in Q1 as we continue to lower core costs while devoting resources to key investments. Costs were down 4% on a GAAP basis in the quarter, and we reported diluted loss per share of $0.09, driven by the two pension charges.
Costs declined mainly due to print distribution efficiencies, as well as declines in depreciation and amortization, raw materials, and outside printing expenses. Adjusted diluted per share was $0.11 in the first quarter compared to $0.07 in the prior year. Our non-operating retirement costs were flat in the quarter at $8.9 million. Retirement costs are expected to generally flatten out in 2015. We expect non-operating retirement costs in the second quarter to be approximately $9 million versus $8.3 million in Q2 of 2014 due to higher multi-employer pension withdrawal costs. In Q4 of 2014, we completed the rental of an additional floor of our headquarters building, which makes up approximately 31,000 sq ft. We began recording the associated rental income in the first quarter, which partially drove the increase in other revenues in the quarter. Moving on to the balance sheet. Our liquidity position was further bolstered in the first quarter.
Our cash and marketable securities balance was $848 million, and our total cash position exceeded total debt and capital lease obligations by approximately $420 million. Late in the first quarter, we repaid at maturity the remaining $224 million principal amount of our 5% senior notes. While interest expense was lower in the quarter, partially as a result of this repayment, the full benefit will begin to be realized in Q2, when interest expense should decline by approximately $3 million. At the beginning of the first quarter, as part of a warrant exercise, we announced the intention to make share repurchases of approximately $101 million, equal to the proceeds received from the warrant transaction. We believe a repurchase program is the best use of cash in this instance, since it will largely neutralize the transaction's impact on our diluted share counts.
To that end, the company has repurchased approximately 547,000 Class A shares for approximately $7.3 million to date as of yesterday. Regarding the pension settlement charge we took in the quarter, in Q4, the company offered participants in various defined benefit plans the option to immediately receive a lump sum payment or to immediately begin receiving reduced monthly annuities. We made a settlement distribution of approximately $96 million on that offer in the first quarter, all of which came from pension assets. This is what's driving the $40 million special charge that you'll see in today's results. The effect of this offer was to reduce the overall size and inherent risk of our plans, as well as to modestly improve our funded status. We also booked a $5 million charge for a partial withdrawal obligation under a multi-employer pension plan in the quarter. Moving to our outlook.
Second quarter circulation revenues are expected to increase at a rate similar to the first quarter trend, driven by the benefit from our digital subscription revenue growth and January's home delivery price increase despite continued challenges on the print side. We expect that the total number of net digital subscriber additions in a seasonally slow second quarter to be approximately 30,000, partially driven by the conversion of NYT Now to a free product and the associated loss in paid digital subscriptions. Advertising revenues are currently expected to be down in the mid-single digits%, driven by print declines, while the digital trend is expected to be consistent with the first quarter growth. Other revenues are expected to increase in the low single digits% as there are no conferences planned in the second quarter.
Second quarter operating costs and adjusted operating costs are expected to decline in the low single digits as we get the benefit of the late 2014 cost reduction initiatives. With that, we'd be happy to open it up for questions.
At this time, if anybody has a question, please press star one on your telephone keypad. Again, that would be star one on your telephone keypad. Your first question comes from Alexia Quadrani from J.P. Morgan. Your line is open.
Thank you. I just have two questions. First is, I think in your opening remarks, you talked about there's much to be done to retain, I think, print subscribers. I was hoping maybe you can elaborate on what those plans are and how they may work. The second question is just really on the cost side. You guys continue to do such an impressive job reducing your costs. Specifically on the print distribution efficiencies you're finding, can those continue? Maybe some color you can give us on the outlook for the raw material costs and whether they're meant to continue to decline.
I'll ask Jim to address those. If I can just say, Alexia, good morning, by the way. Just to say firstly, that we think there's scope in both areas, that we think that there is more we can do on the print retention side, including, by the way, enhancements to the print offering. I think the brilliant relaunch of The New York Times Magazine, the new Men's Style section will be example of actually fundamental work innovating and strengthening the product. There's also work we can do, we believe inside our kind of direct marketing operation to improve print retention. As Jim will say in more detail, we also think there's scope to continue to work on the cost side. Let me hand over to Jim.
Yeah, look, we continue to be aggressive on things, not just on the print distribution side, but print distribution is obviously still a pretty big component of our cost structure. We think there's more work to be done there. I think we have kind of the right people in place who do it and are quite good at it. It gets more difficult, but we do expect to be able to continue to find ways to be more efficient in our print operations. That's just necessary, and that's the way we think about that. On the newsprint side, newsprint prices continue to come down, so we've benefited both from a price and a volume perspective.
Units are down modestly, but price continues to move in our favor, and hard to say, I mean, there's quite a bit of capacity in the market, and as long as there's an overcapacity in the market, we think prices will continue to be under pressure. We'll get the benefit of that.
Thank you. If I could just squeeze in one more on the digital sub growth, which continues to surprise us on the upside. I don't know if you have a number you can share, but longer term, do you guys have an internal number how big that can get that continues to have this impressive growth many years after its launch?
I think that's a really difficult question to answer, Alexia. I mean, what I can say is that I think what's so encouraging, I mean, the actual raw number, 47,000 net subs, I think is a very encouraging number. I think the quality of the subscribers continues to encourage us. We are having some success in reducing churn on the digital side that's in the number. We're very encouraged by the loyalty of our digital subscribers, particularly once they get to the one-year maturity in their subscriptions. There are lots of underlying positive indications in that. We've got Kinsey Wilson now on the case.
Working with us, and Meredith will be in her new Chief Revenue Officer role, also working on whether there are further ways of improving and tweaking the complete portfolio of offers and products on the digital product side. We continue to be very bullish. We're four years in, and we're continuing to see good, steady, strong growth.
Thank you very much.
Your next question comes from Craig Huber from Huber Research Partners. Your line is open.
Yes. Hi, I got a few questions. My first one, as you think about the second quarter, the outlook for advertising here, I'm curious, how did the month of April shape up for you here? Was it similar to January's down 10%, or February, March down 3%-5%, I think you said?
Meredith.
I'm happy to take that one. Hi, Craig. I would say, as Jim suggested, in print generally, feels like we'll be pretty consistent with the first quarter, although January was particularly bad. I don't know that we'll see that again. In digital, we're off to a brisk start.
Very positive start.
Very positive start.
With comps getting a little tougher as we get into the quarter.
Yeah.
Yeah.
I'm sorry. Is that to say that the month of April, basically at the end of the month now, is that down similar to, say, 3%-5% you saw in February and March?
We've had a decent month of April.
Yeah
Largely driven by a really strong digital month, but again
Yeah
The comps get more difficult in the back part of the quarter. That's what gives rise to the kind of mid-single-digit down combined.
Yeah.
Yeah.
As we work through the rest of the quarter and then through the rest of the year, the comps go both ways. The print comps, as it were.
Get easier.
Tend to get easier. Digital comps tend to get tougher because
Yep
that was the latter part of 2014 where we started seeing really strong digital growth.
If you look at the April comps last year, they were the toughest of the quarter by a meaningful amount.
Yep.
Okay. On the print circulation volume side, I believe the fourth quarter daily was down 6.7%, and Sunday was down 4.5%. What were those numbers for the first quarter year-over-year, please?
The number for daily, in the first quarter, we have about 6.8% down and Sunday 5.2% down. One thing I would say about that is, we will expect those trends to improve for a number of reasons as we go throughout the year, and we changed some of our marketing efforts, and we moved away from some lower retaining copies towards the second half of last year. Once we get into the second half of the year, we would expect some of those trends to begin to moderate. We're feeling some of the effect of that.
It's fair to say in that overall print circulation decline for Q1 of 2.4%, where there's some currency affecting that number as well.
I'd say about a quarter of that would be currency related.
Yeah.
That will also moderate as we go into the back half of the year as the euro was declining throughout all of last year. We'll see some moderation on that as well. We look to the back half of the year to see more positive trends on the print circulation side.
Yeah. The currency effect also had, as a whole, a positive effect on the-
On the cost side
on the cost side.
That's right.
You can't see them as a profitability problem.
Jim, another housekeeping question, please. What was the basic shares outstanding at the end of the quarter, please?
The end of the quarter. Well, I have only the average, which obviously it will be higher at the end of the quarter. We were at 163. That number should go higher because the warrant exercise took place, wasn't outstanding for the full quarter. They should tick up a little bit off of the 163 as we go into next quarter. You'll have to factor in whatever the activity around share buybacks are.
Okay. One last question, please. Your cash on the balance sheet, your net cash on the balance sheet, obviously, you've been getting a lot of pressure from investors. I'm sure it's going to intensify here going forward to do something with that cash rather than just let it sit there. What is your long-term expectation? What are you going to do with that? You're just preparing for a rainy day here when we get back into a full-fledged recession?
Well, look, we're in the early stages of a share buyback. We've committed to about $100 million buyback. We didn't really start executing that until late into the quarter. So some of that cash we expect to be putting against share buyback. We feel at the dividend level, the amount of cash that we're generating, that we're paying out in dividends feels about right given where we're at. Look, pension obligations is not an insignificant issue for us, although we don't think we'll be putting cash against that. We have to be mindful, and we can't ignore that. That's not in the net debt number, but we have to be mindful of that. We'll continue to explore the best use of it, but as of right now, we feel like maintaining our kind of fairly conservative balance sheet posture feels about right.
But we are-
The other thing I'd add as well is that in recent weeks I've got in place now the leadership team that I want for this company. We've got a new leader of digital, a new leader of revenue, marketing, and advertising. We will be looking hard at whether there are opportunities to invest both organically in what we're doing already, but potentially also in new business lines. I also think of this being a period as we think about how we grow our company, where we will be looking, of course, judiciously, but looking for ways of investing in growth.
Great. Thank you.
Your next question comes from William Bardeen from SBR. Your line is open.
Good morning. On paying digital subs, how many will you lose on the conversion to free at NYT Now? Was wondering on digital advertising, if you could just talk a little bit about kind of each of the growth areas, mobile, Paid Posts, video, and how you see them developing. Thank you.
Sure. The expectation when we move to pay is that we'll be able to convert at least some portion of our subscribers to paying customers to our core app. We don't think we'll lose the full count. We do think there's probably 4,000 or 5,000 units that will likely come out of our subscriber count. That 30,000 number I gave, I would think that we would be on a gross basis, would be some maybe 5,000 higher than that.
If it wasn't for that effect, actually, it would be in line with or maybe slightly.
Somewhere-
ahead of the Q2 2014 one.
Yeah. We'll have to see how many we can convert, but I don't think there's going to be a big swing on that issue alone. We stopped promoting heavily that product.
Yeah
Over the summer, until we felt like we got the product and the marketing right. There's not that much pressure on that.
Actually, as we've said before, there's some seasonality in the digital ad numbers we've seen, certainly saw clearly in 2013 and 2014 in Q2, partly because it's a lesser quarter for education. Q2 typically has been somewhat lower than Q1. I think our number, given the fact that Now is going free, it supports the idea of continued bullish growth in the trial account, and probably means that we hit the 1 million number of 1 million digital-only subscribers probably at some point in Q3.
I think you asked about digital advertising. Four main areas of growth, really, actually five. Paid Posts continues to be a big part of the growth story, and I would still say we're just getting started there. We've made a big expansion of the team here in the U.S. to actually build the branded content work, and so we expect that to continue to grow nicely. We're also making an investment in building an international content studio. We think that will have a nice impact going forward. Mobile has been a growth area, I want to say, in the 40% range up over first quarter of last year, and that's also an area that we expect to continue to grow and have a lot of optimism around.
One of the reasons mobile grew in the quarter is we've done a lot of, I think, good work to change, and in many cases, add ad placements in very careful ways with an eye toward user experience, and that's gone well. Programmatic grew nicely in the first quarter. What I'll say there is that is mostly coming in the form of preferred and private deals where we're opening up specific demand pools, so a particular marketer is buying us in a more automated way. Then video, which is also still a relatively small business for us, video is growing and growing nicely. The one other thing I'll say is we're still seeing in digital advertising, and I think we've got some more running room here, just the benefit of improved sales execution.
I'm curious, on video, are you doing any off-site syndicated video, and do you have any aspirations of doing that?
Yes and yes. We are doing some now, and we definitely have aspirations of doing substantially more there. I think we had our video NewFront this week. We've made really good progress on the quality of our video production, the number of productions, and now the real work is how do we achieve substantial stream growth? We are working on that.
Just one final question. How large is mobile as a proportion of your digital ad revenues?
I think we just, Andrea can correct me, but we've just crossed so that it's more than 10%, and we expect that number to keep going up. It's a big area of focus for us in advertising right now, as it is on the consumer side of the business.
Great. Thank you.
The percentage is substantially higher on the consumer side.
Yes. Particularly this last quarter.
Yeah.
Mm-hmm.
Your next question comes from Doug Arthur from Huber Research. Your line is open.
Yeah, thank you. Mark, two questions. The decision to go free on New York Times Now, I guess question one is why do you think it did not work as a paid model? And then secondarily, what are you hoping to gain by making it free, I would assume on the digital ad side? And then second question, you're combining marketing and advertising under Meredith. What does that mean? What do you see as the benefit of that?
Okay. No, great. Two really good questions. Firstly with NYT Now. I think where we got to with NYT Now is thinking that it will reach a broader audience, and build a broader audience free than it could as a subscription product. I think there's a lesson. When we introduced NYT Cooking later, rather a few months after NYT Now last year, learning from NYT Now, we decided the right thing to do with NYT Cooking was to try and build that audience right away before turning to the question of monetization. The first thing straightforward is we think NYT Now is great. It's been very influential. People who use it love it, but we wanted to get it out to more people. Making it free will help it do that. Absolutely, a bigger audience means that we can think about building advertising revenue from it.
I don't rule out other forms of revenue from now in due course, but it means that people can really get out there, use it and get to know it. As for Meredith, I believe that in all sorts of ways, it makes sense to think about our two revenue streams, advertising and consumer revenue together. There are many things we need to do around the way we think about our content management systems, about the way in which both advertising and direct marketing messages flow into the news feed, particularly on smartphone, where it makes sense to think about the two together. Creative services. We are beginning to have a significant and very exciting business in actually making advertising content in our T Brand Studio for our Paid Posts. We have a big creative service operation inside our marketing function to do those together.
I think also as we think about new products and think about what's the best way of optimizing monetization, I think having one leader thinking about the two together makes sense. Also I want to say something more straightforward, which is Meredith's made a fantastic success in turning around and strengthening our advertising operation. I'm very much hoping she'll do the same in marketing. Those are the reasons.
Great. Thank you.
Question comes from Kannan Venkateshwar. Your line is open from Barclays.
Thank you. Is this better?
Better.
Just a couple of questions. First, on the trends in terms of your print versus digital. Now that digital has been around for the last few quarters, just wanted to understand what the underlying trends look like versus print on churn, and then on how many of your print subscribers moved over to digital, what kind of consumption patterns there are between mobile, tablet, desktop, and so on. If you can just help us with that'll be very useful.
This is a gigantic topic, Kannan, so I'm not sure we can do complete justice to your question right now, but one or two headlines is, I mentioned loyalty, digital subscriber loyalty, particularly after a year's subscription and on up. Our digital subscribers are slightly more loyal than our print subscribers. It's a very complicated picture in terms of print to digital subscription, but I think without wanting to disclose detailed numbers, I would say that we are seeing a movement week by week from print to digital, one of the movements in subscription. It is relatively small numbers, small percentage numbers at the moment. The numbers are, as it were, slowly growing. We believe that the print subscription offer remains relevant to many households, and the print product remains a great product.
Obviously, we would much rather, if a print subscriber wants to no longer receive the physical New York Times, we would much rather they converted to becoming a digital subscriber, than to churn out of our ecosystem altogether. But we also don't want to, as it were, unnecessarily hurry that process. One of Meredith's challenges is going to be to, in a sense, think through and manage that process of transition in a way which generates the most cash for us over the long term and most future-proofs the business. We're thinking very carefully about that. In terms of different platforms, it won't be a surprise to hear that we're seeing dramatically more use of mobile platforms, in particular smartphone, than would have been true a few years ago.
Though it's also true that although smartphone is heavily used by subscribers, much of the increased traffic to smartphone is from somewhat lighter users.
Mm-hmm.
A majority of our visits are to mobile rather than desktop. If you look at time spent, desktop and particularly the amount of time spent by very heavy use subscribers, a lot of it's still on desktop. We're seeing a transition. I believe that we're beginning to solve the issues around monetization on smartphone with our superior ad units. Video will play a part in that, Paid Post will play a part in that. We also believe that we are doing a better job in terms of convincing subscribers that it makes a lot of sense to have subscriptions, even if they are smartphone-heavy users. That's not a complete answer, but I've touched some of your points anyway.
Yeah, sure. No, that's very helpful. Thank you.
Comes from John Janedis from Jefferies. Your line is open.
Hi. Thanks. Good morning. Couple of questions. First, there's been a lot of talk in the marketplace about pressure on preprints and some changes from the consumer electronics and retail verticals. Could you tell us what you're seeing? Just a reminder of what % of ad revenue the category represents.
By preprints, I assume you mean what we call.
Correct
FSIs or free-standing inserts. I do think that is a category that is under a fair amount of secular pressure. It is not a big category for us. While it is under pressure, it's not having a huge impact because, again, it's a small minority of our print advertising business. We're actually looking at the number now.
It's like 2% or 3% of our advertising.
Yeah.
It's a relatively small number.
It's a very small part of the business. Most of our print advertising is still coming from major national advertisers, and we have a fair amount of optimism there, particularly around the new products that we've launched for those advertisers, like the magazine, like even T, which was redesigned a couple of years ago, but to great success, and Men's Style.
Actually, I think it's worth adding that with no names, no pack drill, but we believe that measuring column inches and studying our competitors, that we're doing significantly better.
Yeah
in our national print advertising business than our competitors are.
Yeah. I'll say one more thing just on the preprints or the FSIs specifically. It is a business that we're putting some thought into, so making sure that we have it staffed the right way and that we're optimizing our execution is something that we have spent some time on. We're committed to getting every last dollar that's there into the Times from FSIs.
Okay. That's helpful. Just, hey, Jim, I just wanted to clarify what you said on cost. Because I think in your remarks, you said future quarters wouldn't have as much savings and then said that, I think, Q2 costs would be down low singles. I wanted to clarify, were you referring to the 4% GAAP number from Q1? Is the view now that the full year will be down modestly?
I think the way it'll play out is I think you'll see good performance in Q2, where some of the things we benefit in Q1 might be one time in the quarter. I think what we'll see in Q2 is some of the marketing spend around some of the new product launches that took place last year, which won't exist this year, will suggest that we'll have some pretty good performance in Q2. I think the back half of the year will be less aggressive than the first half of the year. Still, I expect costs will largely be down back half of the year as well, but probably more modest than the first half.
Okay. Maybe one quickie on advertising. I just wanted to clarify, and we haven't discussed this for a while, I think, but just in terms of the Easter shift, because it sounds like April seems somewhat in line to March. Is there more or less a tougher comp because Easter had a positive impact on March and a negative one in April, or is it de minimis?
I think it's pretty de minimis. I don't think that had a material impact.
Okay. Thanks so much.
I have no further questions in queue. I turn the call back over to the presenters for closing remarks.
Thank you for joining us this morning, and we look forward to talking to you again next quarter.
Goodbye, everyone. Thank you.
Bye-bye.
Thank you, everyone. This concludes today's conference call. You may now disconnect.